Zhou beca frustrated by the managers at yahoo

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dollars, it would be entirely possible for us to overtake Baidu.” Zhou became frustrated by the managers at Yahoo headquarters: “They were unwilling to invest in the company’s future. It is like farming. If you only care about harvesting, but not fertilizing or cultivating, eventually the land will lose its vitality.” China was the least of Yahoo’s worries. In the United States, the company was being eclipsed by Google, whose algorithmic search engine was outgunning Yahoo’s directory-based design. Yahoo was slow to recognize the threat posed by Google, a company like Yahoo founded by two Stanford Ph.D. candidates. Yahoo had missed an opportunity in 1997 to buy Google from Larry Page and Sergey Brin, but its biggest mistake of all was the June 2000 decision to make Google its search partner. With Google’s logo featured on its home page, millions of customers discovered a superior search product and gateway to the broader Internet that made Yahoo increasingly irrelevant. 14 In July 2005, six months before the end of his two-year earn-out, Zhou announced he was quitting Yahoo China. Within two months he had set up his own company, Qihoo 360 Technology. Here he would adopt the same aggressive tactics 15 that he’d used at 3721. It wasn’t long before Zhou took to the media to criticize Yahoo, telling journalists that selling 3721 to Yahoo was his biggest regret, that Yahoo’s corporate culture stifled innovation, and that the firm was poorly managed: “Yahoo’s leaders have unshakable responsibility for its decline. Whether it is spiritual leader Jerry Yang or former CEO [Terry] Semel, they are good people, but [they] are not geniuses. They lack true leadership qualities. When facing competition from Google and Microsoft, they didn’t know what to do, and had no sense of direction.” Yahoo had struck out twice in China: first Founder, then 3721. After years of frustration, Jerry Yang made a bold decision. He handed Jack $1 billion, and the keys to Yahoo China’s business, in exchange for a 40 percent stake in Alibaba.
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Project Pebble Although it took some time for them to realize it, the deal was transformative for Alibaba and Yahoo. Alibaba gained the ammunition to finish off eBay in China, and to build Taobao and Alipay into the behemoths that they are today. The rising value of its stake 16 gave Yahoo leverage in dealing with its increasingly frustrated investors, concerned about its deteriorating market position versus Google and its subsequent controversial decision to rebuff Microsoft’s offer to buy the company. The deal originated in a May 2005 meeting 17 between Jack and Jerry at the Pebble Beach golf course in California. Before a steak-and-seafood dinner with other tech luminaries from the United States and China, the two founders, who had a common shareholder in Masayoshi Son, took a stroll 18 outside. Jack recalled, “It was extremely cold that day, and after ten minutes I couldn’t bear it anymore. I ran back indoors. [But] in those ten minutes we exchanged some ideas. I told him clearly that I wanted to enter the search business, and my opinion was that search engines would play a very important role in e-commerce in the future.”
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